MARKET COMMENT: UK Equities Firm Ahead Of Central Bank Meetings

Thu, 05th Sep 2013 09:56

LONDON (Alliance News) - London's main equity markets all trade modestly higher by mid morning Thursday with the FTSE 100 up just 0.2% at 6,488 points. The FTSE 250 is 0.5% higher, while the AIM All-Share is 0.1% higher.

European markets opened with positivity taken from Asia, where markets have closed higher after the Bank of Japan revised up its assessment of the economy but kept liquidity high, with its monetary easing program unchanged. The FTSE 100, CAC 40 and DAX all opened strongly, each rising about 0.5% but have slid slightly by mid morning with the European majors now about flat on the day.

Traders seem less concerned this morning by the ongoing debate over military intervention in Syria over its alleged use of chemical weapons. US President Barack Obama secured backing from a Senate committee late on Wednesday for a limited strike on the country, but will now have to get through a full House and Senate vote which will wait until next week.

Following Wednesday's profit warning from Ryanair that sent all airline stocks tumbling, most are rebounding strongly Thursday after the release of August traffic statistics from easyJet that showed an increase in passenger numbers of 3.9% over the month. EasyJet shares trade 1.56% higher, and International Consolidated Airlines Group trade 2% higher.

At the other end of the spectrum, pharmaceuticals are amongst the biggest fallers as GSK released disappointing results of tests of a new melanoma treatment drug. GSK is one of the biggest blue-chip fallers, down 1.5%. Hikma is down 0.9% and Shire down 0.3%.

Another positive economic reading for the UK has come in the form of new car sales, which have increased for the 18th month in a row and are now above pre-recession levels. The data is helping the pound to maintain Wednesday's break above 1.56 against the dollar, currently trading at USD1.5615.

Big events still to come are central bank meetings.

The BoE's decisions on interest rates and asset purchasing are due at mid-day. No change is expected, and there is no mandatory statement. With every economic indicator of late coming out strongly, Governor Mark Carney may prefer to remain quiet Thursday. However if any statement is released it will be watched with keen interest as to how Carney will further defend his forward guidance.

Also, at 1245 BST, the ECB will announce interest rates. Again, no change expected but Governor Mario Draghi will be giving his usual press conference.

By Jon Darby; jondarby@alliancenews.com; @jondarby100